- The Washington Times - Wednesday, March 20, 2002

Three major airlines have made further cuts in travel agents' commissions, a move that has shocked some in an industry still struggling six months after the September 11 terrorist attacks.
"We were blindsided," said Jim Tittsworth, vice president of operations at Golden Travel Service in the District.
Delta Airlines Inc. last week ended commissions in an effort to reduce costs even further. Earlier this week, AMR Corp.'s American Airlines and Contintental Airlines followed suit. Industry observers say that's just the beginning.
"I do expect [the other carriers] to go along with it," said Terry Trippler, of Trippler & Associates, which follows the airline industry. "I think everyone was expecting it, but just didn't know when."
However, many in the industry say they expected the airlines' would eventually reduce their commissions someday just not so soon.
"It was a shock, but not a surprise," said Bill Maloney, executive vice president and chief operating officer of the American Society of Travel Agents.
Over the past several years, major airlines have reduced the commissions they pay to travel agents who book flights. Just last year, the airlines decreased their commission to 5 percent, with a cap of $20 on round-trip domestic flights, in an effort to cut their own costs.
"Most of us in this business expected it to [eventually] get to zero commission," Mr. Tittsworth said. "It was inevitable."
As a result of declining commissions over the past seven years, travel agents have had to find different ways to make money. Some have changed their core business to focus on niches like travel packages, tours and cruises, and have added service fees ranging from $12 to $25.
"For the most part, agents have built a business that is not centered around air transportation," said Mr. Maloney. They have had to in order to stay in business.
Mr. Maloney expects travel agents, who book about 80 percent of airline reservations, to increase their fees to consumers as a result of the latest cuts.
Golden Travel Service already has. The local travel agency has been charging transaction fees since the commission cuts began in 1995, and has just increased its fees based on the airlines' latest move.
"In order to exist, you have to look at the bottom line," said Mr. Tittsworth, who declined to disclose his agency's fees. "There's no other way to make a profit unless you charge a transaction fee."
Observers are confident consumers will stay with their travel agents, despite a price rise, arguing their expertise and knowledge is worth the price .
"Consumers will make the choice," said Mr. Trippler, who says he will continue to use a travel agency even if it increases its fees. "I could change my own oil, but I prefer to pay someone else to do it for me."
The latest commission cuts are yet another blow to the travel agency industry, which has been struggling to get back on its feet since September 11.
The American Society of Travel Agents estimates that in the four weeks after the attacks, the industry lost $1.36 billion in business from a dramatic drop in bookings for flights, hotel rooms, car rentals and cruises. ASTA projects that the travel agency industry will lose $4.4 billion through December 2002.
Prior to September 11, the industry was already facing declining business travel.



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